Summary dismissal and disclosure of confidential information

An employment tribunal has recently held that a foreign exchange trader who was dismissed for sharing information via instant messaging was unfairly and wrongfully dismissed.

 

In the case the trader disclosed confidential client information to traders from different banks in an online chat room. The practice was widespread in the sector as a whole – and at the bank in question – despite various policies preventing the disclosure of confidential information.

 

In the current case, the employee was employed by a large bank based in London and was set targets in annual appraisals by his manager. One of the goals was to maintain contacts in the industry and the manager encouraged the employee to join an online chat room in order for him to gain further market information. The employee was not given guidance on what should be shared in the chat room.

 

The employer’s code of conduct included a confidentiality section and employees were provided with a handbook stating that generally any information received during their employment was to be presumed to be confidential. In addition, there was a confidentiality policy on the intranet and, under the disciplinary policy, unauthorised disclosure of confidential information was classed as gross misconduct.

 

An instruction to employees to stop using the chat rooms was made around three years after the employee started using the chat room. The employer commenced a review of the matter and the employee in question was suspended. He was subsequently invited to attend a formal hearing to address allegations that he shared confidential client information with traders at other banks in chat rooms. A manager of a separate part of the bank was appointed as chair of the disciplinary process. The review was limited to twelve online chats, the employee’s appraisal records and the policies of the bank.

 

The employee’s main defence was that his actions should be considered alongside the general culture of information sharing. Importantly, there was a broad regulatory review being undertaken at the time by the Financial Conduct Authority which in fact led to a large fine being imposed on the bank in question as well as many others in the sector. The employee suggested that a decision should not be made in his individual case until the outcome of the general review was established.

 

The employee also argued that there had been no instructions about what information should be shared in the chat rooms and managers had in effect condoned his actions. After the meeting, an employee from Employee Relations interviewed a manager working at the bank about chat rooms but only a summary of this interview was prepared. The chair of the disciplinary procedure informed Employee Relations of the decision to dismiss the employee, but the employee was not informed of this until around one month later. The broad regulatory review by the FCA had been concluded in the meantime but the Chair was not aware of the outcome before deciding to dismiss the employee.

 

The employee appealed the dismissal on the following grounds: the disciplinary process was unfair as it should have been put on hold until the regulatory investigation was concluded; none of the points the employee raised at the hearing had been investigated properly and he had been treated inconsistently with others who had acted in a similar way.

 

The employment tribunal held that the employee had been unfairly and wrongly dismissed. The dismissal was unfair because the employer did not act within the band of reasonable responses. It was wrongful because the employee’s breach of the contract was not so severe as to warrant dismissal without notice. The employee had not deliberately breached his duty of confidentiality because he believed that he was permitted to act in such a way.

 

Many of the criticisms of the employer centred on the investigation. The tribunal described the investigation undertaken as ‘superficial’ and the employer’s actions were outside the range of reasonable responses for the investigation in this case. The tribunal considered that there was insufficient investigation into the general culture of information sharing and there should have been further investigation into the allegation that managers condoned the employee’s behaviour.

 

Employers need to be mindful of conducting thorough investigations during disciplinary procedures for misconduct. Importantly, employers need to consider whether the general culture in the company complies with the policies on paper; these policies are insufficient if they are not generally followed.